Aug

20

 Paul Heyne's book, Student's Guide to Economics, concludes work depends on specialization, which in turn requires trade, while trade is coordinated through movements in relative prices.

Then how prices are determined? Substitutes (everything depends on everything), costs (there are no objective costs, "things" cannot have costs, only actions do; opportunity costs), incentives (marginal insight, the value of anything and everything depends on the situation), and expectations, combined with institutions, which secure private property rights and freedom to exchange, lead to economic growth.

I believe this is an instructive book, to check if price formation for individual companies have similar factors. Besides, the author offers other interesting observations.

On scientific method I believe there is no such thing as absolute 100% proof. Beyond that, all we have is probability and levels of confidence. But what we do know is that principles of science are conservative, and this is why focus is on avoiding type one errors.


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